At present, a subscriber can join NPS up to 60 years of age. However, they can continue to contribute till 70 years.
Sarbajeet K Sen
You will soon have the option to begin your retirement savings under the National Pension System (NPS) even after you reach 60 years of age. In a major relaxation of norms, the pension regulator - Pension Fund Regulatory and Development Authority (PFRDA) – has decided to raise the entry age for NPS from the current 60 years to 65.
“The age for joining NPS is going to be raised to 65. Anyone from 18 to 65 years will be allowed to join,” PFRDA Chairman, Hemant Contractor told Moneycontrol.
Contractor said that a notification giving effect to this move will be issued shortly.
He said that the maximum age for contribution under NPS will remain unchanged at 70 years. Thus, a person who chooses to join at 65 would have a 5-year accumulation period under NPS.
Contractor said that the decision to raise the joining age was taken after assimilating various feedback received from the market. “We keep getting a lot of feedback from the market. One of the feedback that we got was that people who are in their 60s would also like to join NPS and contribute for retirement corpus. So we thought it is not a bad idea,” he said.
The pension regulator also took into account the increasing longevity of Indian population. “The other reason that prompted us to take the decision is that people are living longer and many continue to work well beyond 60. In fact, many people don’t stop working or retire at 60. That was also one of the things coming from the market. People said we are 60 and still working, so why don’t you allow us to enter NPS,” Contractor said.
Under present NPS rules, a subscriber can join up to 60 year. However, they can continue to remain in the scheme till 70 years of age and even keep contributing. Alternatively, their option to buy annuities can be deferred for three years from 60 to 63.
The NPS is slowly emerging as a major pillar of old age income security. It is open to all citizen’s and offers a diverse choice of investment schemes for creating wealth for retirement purpose during one’s lifetime.
Under NPS, equity investment of a subscriber’s funds can go up to 75 per cent of their contribution if one chooses the aggressive life-cycle fund. It also offers a conservative option with a heavy component of fixed income investment for those who are risk-averse.
Subscribers can choose to open a Tier-1 account with withdrawal restrictions and a Tier-2 account which is a voluntary savings facility and freely withdrawable.
While Tier-1 comes with tax benefits, there are no tax saving for money invested Tier-2 accounts.
The minimum contribution for Tier-1 at the time of account opening and for all subsequent transactions Rs 500, while the minimum annual contribution has to be Rs 1,000. For Tier-2, the minimum contribution at the time of account opening ss Rs 1,000 and for all subsequent transactions a minimum amount of Rs 250 has to be invested each time. There is no minimum contribution requirement for the financial year for Tier-2 account, which cannot be opened without a Tier-1 account.